US stocks closed relatively unchanged on Wednesday (26/07/23), but the Dow Jones managed to scored a 13-day gain streak, following a Federal Reserve rate hike that left the door open for future hikes. The Fed decided to lift its benchmark interest rate by 25 bps, which was anticipated by global market participants, marking the 11th hike in the U.S. central bank’s past 12 policy meetings; placing the Fed Fund Rate in the range of 5.25-5.50%. The Fed stated that the Federal Open Market Committee (FOMC) will continue to evaluate additional information and its implications for monetary policy going forward; thereby indicating that the US central bank remains open to various policy options in order to find the end point of this interest rate hike cycle and to keep Inflation under control. Fed Chair Jerome Powell said in a press conference the central bank will make decisions meeting by meeting, closely watching economic data, but noted that a rate cut is very unlikely this year; because although headline inflation was able to flatten, core inflation still remains quite high above the 2% target limit. The good news is that the central bank no longer expects a recession. Goldman Sachs said in a note to clients that the Fed’s statement did not signal a slower pace of hikes in the future, but that the bank was expecting a hold in September. Meanwhile, the quarterly performance report sentiment is continuing to fill the market with big tech stocks releasing their earnings and investors reacting in various ways. The NYSE FANG+ index, which contains a collection of giant capitalization company names, dropped 0.72%. The index has rallied 75% this year on the back of optimism over artificial intelligence (AI) and hopes that the Fed is nearing the end of its interest rate hiking trend. Not to mention other economic data released yesterday, one of which from the Europe, with France recorded a Consumer Confidence Index that remained the same as the previous period at 85. Meanwhile, the US released Building Permits and New Home Sales (June) data which clearly showed a weakening compared to the previous month. In terms of commodities, oil prices (US WTI) closed down 1.1% to USD78.78/barrel, as data showed US crude oil inventories fell less than expected.

JCI closed in positive territory again, up 30.57points / +0.44% to 6948.28, the most definitive closing position in the last 7 months; supported by various sentiments, one of which is waiting for the Federal Reserve decision, BI7DRR rate decision, and responding to the latest global economic growth projections from the IMF where they cut global economic growth from the previous 3.5% to 3% this year and next year. The IMF also expects developed countries’ economic growth to drop to 1.5% this year, from 2.7% in 2022, and will still drop to 1.4% in 2024; less than the achievements of emerging countries which are predicted in 2023 to stay at the same 4% level as last year and even increase to 4.1% in 2024. Considering JCI’s critical position at the decisive Resistance area of 6950-6970, NHKSI RESEARCH sees bullish possibility is still open but suggest not to be too aggressive in adding portfolio position as we have to consider regional market condition as well. Later today the European Central Bank (ECB) will announce its interest rate decision where it is expected to rise by 25 bps to 4.25%. Later in the evening, the US will release Durable Goods Orders (June) and revised second quarter GDP, Goods Trade Balance (June), Pending Home Sales (June), as well as Initial Jobless Claims which is expected to rise to 235k from 228k in the previous week.

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